PMV Pharmaceuticals(PMVP) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Financial Statements (Unaudited) This section presents unaudited condensed financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed notes on financial position and accounting policies Condensed Balance Sheets (Unaudited) Condensed balance sheets show decreased total assets and equity, primarily from reduced cash, offset by increased marketable securities | Metric | June 30, 2021 (Unaudited) (in thousands) | December 31, 2020 (in thousands) | Change (k) | % Change | | :-------------------------------- | :------------------------------------- | :------------------------------- | :--------- | :------- | | Cash and cash equivalents | $189,423 | $361,422 | $(171,999) | -47.6% | | Marketable securities, current | $128,926 | $— | $128,926 | N/A | | Marketable securities, noncurrent | $20,613 | $— | $20,613 | N/A | | Total current assets | $323,080 | $364,761 | $(41,681) | -11.4% | | Total assets | $355,910 | $365,531 | $(9,621) | -2.6% | | Total current liabilities | $7,504 | $6,410 | $1,094 | 17.1% | | Total liabilities | $18,063 | $6,410 | $11,653 | 181.8% | | Total stockholders' equity | $337,847 | $359,121 | $(21,274) | -5.9% | Condensed Statements of Operations and Comprehensive Loss (Unaudited) Statements of operations show increased net loss for Q2 and H1 2021, driven by higher R&D and G&A expenses | Metric (in thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Change | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :----- | :------- | | Research and development | $7,664 | $5,804 | $1,860 | 32.0% | | General and administrative | $5,386 | $2,281 | $3,105 | 136.1% | | Total operating expenses | $13,050 | $8,085 | $4,965 | 61.4% | | Net loss | $(12,874) | $(7,967) | $(4,907) | 61.6% | | Metric (in thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | Change | % Change | | :-------------------- | :----------------------------- | :----------------------------- | :----- | :------- | | Research and development | $15,163 | $11,760 | $3,403 | 28.9% | | General and administrative | $9,560 | $3,979 | $5,581 | 140.2% | | Total operating expenses | $24,723 | $15,739 | $8,984 | 57.1% | | Net loss | $(24,476) | $(15,221) | $(9,255) | 60.8% | Condensed Statements of Convertible Preferred Stock and Stockholders' (Deficit) Equity (Unaudited) Equity statement details changes from preferred stock conversion, net losses, and increased paid-in capital from stock compensation | Metric (in thousands) | June 30, 2021 | December 31, 2020 | | :-------------------- | :------------ | :---------------- | | Additional paid-in capital | $472,196 | $469,001 | | Accumulated deficit | $(134,356) | $(109,880) | | Total stockholders' equity | $337,847 | $359,121 | | Metric (in thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :-------------------- | :----------------------------- | :----------------------------- | | Stock-based compensation expense | $1,777 | $679 | Condensed Statements of Cash Flows (Unaudited) Cash flow statements show a net decrease in cash for H1 2021, primarily from cash used in investing activities | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(22,145) | $(15,034) | | Net cash (used in) provided by investing activities | $(150,450) | $19,931 | | Net cash (used in) provided by financing activities | $1,418 | $(124) | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(171,177) | $4,773 | | Cash, cash equivalents, and restricted cash - end of period | $190,245 | $78,051 | Notes to Unaudited Condensed Financial Statements Notes provide essential context and detailed disclosures for financial statements, covering accounting policies, fair value, and commitments - PMV Pharmaceuticals, Inc. is a clinical-stage oncology company focused on p53 mutations, incorporated in Delaware in March 2013. The company completed an IPO on September 25, 2020, raising $223.2 million net proceeds[26][28] - The company has incurred significant net losses and negative cash flows from operations since inception, with an accumulated deficit of $134.4 million as of June 30, 2021. Management believes current cash and equivalents are sufficient for at least the next twelve months[29] - No material changes to significant accounting policies since December 31, 2020, except for the adoption of ASU No. 2016-02 (Leases) and ASU 2019-12 (Income Taxes) effective January 1, 2021. The lease standard adoption resulted in recording ROU assets of $970k and lease liabilities of $1,129k[30][45][47] Fair Value of Financial Assets (in thousands) as of June 30, 2021 | Financial Assets | Carrying Amount | Fair Value | Level 1 | Level 2 | Level 3 | | :-------------------- | :-------------- | :--------- | :------ | :-------- | :------ | | Money market funds | $38,865 | $38,865 | $38,865 | $— | $— | | Corporate securities | $263,799 | $263,799 | $— | $263,799 | $— | | Government securities | $32,740 | $32,740 | $— | $32,740 | $— | | Total | $335,404 | $335,404 | $38,865 | $296,539 | $— | - The company signed a new lease in January 2021 for 50,581 square feet of office and laboratory space in Princeton, NJ. The lease term extends through 2032, with total payments of $19.6 million. Lease liabilities as of June 30, 2021, were $11,235k[65][66] Stock-Based Compensation Expense (in thousands) | Period | 2021 | 2020 | | :---------------------- | :---- | :--- | | Three Months Ended June 30 | $1,150 | $383 | | Six Months Ended June 30 | $1,777 | $679 | - Total compensation cost related to nonvested awards not yet recognized is $17,526k, expected to be recognized over a weighted-average period of 3.4 years[78] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and results, covering business overview, financial components, comparative performance, and liquidity Overview PMV Pharmaceuticals is a clinical-stage oncology company developing p53 mutation therapies, with significant losses and a lead candidate in Phase 1/2 clinical trial - PMV Pharmaceuticals is a clinical-stage oncology company pioneering the discovery and development of small molecule, tumor agnostic therapies designed to target p53 mutations[92] - The company initiated a Phase 1/2 clinical trial in October 2020 for its lead product candidate, PC14586, which was granted FDA Fast Track Designation for the treatment of patients with locally advanced or metastatic solid tumors that have a p53 Y220C mutation[93] Financial Performance (in millions) | Metric | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | Accumulated Deficit (June 30, 2021) | | :---------------- | :------------------------------- | :----------------------------- | :---------------------------------- | | Net Loss | $(12.9) | $(24.5) | N/A | | Accumulated Deficit | N/A | N/A | $(134.4) | Components of Results of Operations This section outlines key financial components: revenue (none), operating expenses (R&D, G&A), and interest income, detailing their nature and future trends - The company has not generated any revenue from product sales to date and does not expect to in the foreseeable future[97] - Research and development expenses, primarily consisting of personnel costs, third-party contractor services, and manufacturing, are expensed as incurred and are expected to increase substantially as product candidates advance through clinical trials[98][100] - General and administrative expenses, including personnel costs and professional services, are also expected to increase due to operating as a public company and advancing product candidates[101] Results of Operations This section compares financial performance for Q2 and H1 2021 vs 2020, highlighting increased operating expenses and net losses Net Loss (in thousands) | Period | 2021 | 2020 | Change | % Change | | :---------------------- | :-------- | :-------- | :-------- | :------- | | Three Months Ended June 30 | $(12,874) | $(7,967) | $(4,907) | 61.6% | | Six Months Ended June 30 | $(24,476) | $(15,221) | $(9,255) | 60.8% | Total Operating Expenses (in thousands) | Period | 2021 | 2020 | Change | % Change | | :---------------------- | :------ | :------ | :------ | :------- | | Three Months Ended June 30 | $13,050 | $8,085 | $4,965 | 61.4% | | Six Months Ended June 30 | $24,723 | $15,739 | $8,984 | 57.1% | Comparison of the Three Months ended June 30, 2021 and 2020 Q2 2021 saw R&D expenses increase by $1.9 million, G&A expenses rise by $3.1 million, and net interest income decrease Research and Development Expenses (in thousands) | Category | 2021 | 2020 | Change | % Change | | :------------------------ | :---- | :---- | :----- | :------- | | Research | $2,180 | $1,560 | $620 | 39.7% | | Development | $3,484 | $2,204 | $1,280 | 58.1% | | Personnel related | $1,718 | $1,862 | $(144) | -7.7% | | Stock-based compensation | $282 | $178 | $104 | 58.4% | | Total R&D Expenses | $7,664 | $5,804 | $1,860 | 32.0% | - General and administrative expenses increased by $3.1 million to $5.4 million in 2021, primarily due to increased headcount for infrastructure, finance and legal support, directors and officers insurance, and facility-related costs for the new Princeton, NJ office building[107][109] Interest Income, Net (in thousands) | Period | 2021 | 2020 | Change | % Change | | :---------------------- | :--- | :--- | :----- | :------- | | Three Months Ended June 30 | $113 | $157 | $(44) | -28.0% | Comparison of the Six Months ended June 30, 2021 and 2020 H1 2021 saw R&D expenses increase by $3.4 million, G&A expenses surge by $5.6 million, and net interest income decrease Research and Development Expenses (in thousands) | Category | 2021 | 2020 | Change | % Change | | :------------------------ | :---- | :---- | :----- | :------- | | Research | $4,631 | $3,207 | $1,424 | 44.4% | | Development | $6,374 | $4,593 | $1,781 | 38.8% | | Personnel related | $3,625 | $3,640 | $(15) | -0.4% | | Stock-based compensation | $533 | $320 | $213 | 66.6% | | Total R&D Expenses | $15,163 | $11,760 | $3,403 | 28.9% | - General and administrative expenses increased by $5.6 million to $9.6 million in 2021, primarily due to a $2.9 million increase in personnel and office-related expenses (headcount), a $1.0 million increase in finance and legal support, a $1.2 million increase for directors and officers insurance, and a $0.5 million increase due to facility-related costs for the new Princeton, NJ office building[110] Interest Income, Net (in thousands) | Period | 2021 | 2020 | Change | % Change | | :---------------------- | :--- | :--- | :----- | :------- | | Six Months Ended June 30 | $241 | $563 | $(322) | -57.2% | Liquidity and Capital Resources The company relies on equity financing, has significant losses, and holds $190.2 million in cash and $149.5 million in marketable securities, projected to fund operations through 2023, but future funding is anticipated - Since inception, the company has not generated revenue and has incurred significant operating losses and negative cash flows. Operations have been financed primarily through issuances of convertible preferred and common stock, including $223.2 million net proceeds from an IPO in September 2020[113] Liquidity Position (in millions) as of June 30, 2021 | Asset Category | Amount | | :---------------------------------- | :------- | | Cash, cash equivalents, and restricted cash | $190.2 | | Short-term marketable securities | $128.9 | | Long-term marketable securities | $20.6 | | Accumulated deficit | $(134.4) | - Based on current research and development plans, the company expects its cash, cash equivalents, and marketable securities as of June 30, 2021, to be sufficient to fund operations at least through 2023[115] - Future funding requirements are substantial and unpredictable due to preclinical and clinical development activities. The company expects to fund future needs through equity/debt financing or collaboration arrangements, which may result in dilution or restrictive covenants[114][116] Cash Flows (in thousands) for Six Months Ended June 30 | Activity | 2021 | 2020 | | :-------------------------------- | :---------- | :---------- | | Cash used in operating activities | $(22,145) | $(15,034) | | Cash (used in) provided by investing activities | $(150,450) | $19,931 | | Cash (used in) provided by financing activities | $1,418 | $(124) | | Net increase in cash, cash equivalents, and restricted cash | $(171,177) | $4,773 | Off-Balance Sheet Arrangements The company has not entered into any off-balance sheet arrangements during the periods presented - The company does not currently have, nor in the past had, any off-balance sheet arrangements[124] Critical Accounting Policies and Significant Judgments and Estimates Financial statements require significant estimates and judgments, especially for R&D costs, with no material changes to critical accounting policies reported - The company's critical accounting policies involve a high degree of judgment and complexity, particularly regarding research and development costs, accrued R&D costs, and related prepaid expenses[127][128] - No material changes to critical accounting policies were made during the six months ended June 30, 2021, other than those described in Note 2 of the financial statements[127] Recent Accounting Pronouncements Refer to Note 2 of the unaudited condensed financial statements for recent accounting pronouncements - For a description of recent accounting pronouncements, refer to Note 2 of the notes to the unaudited condensed financial statements[130] JOBS Act Accounting Election PMV Pharmaceuticals, an EGC, expects to lose its status by December 31, 2021, becoming a large accelerated filer with increased costs - The company is an 'emerging growth company' (EGC) and has elected to use the extended transition period for complying with new or revised financial accounting standards[132][133] - Based on its common share market value at June 30, 2021, the company expects to lose its EGC status on December 31, 2021, and qualify as a large accelerated filer[132][164] - Losing EGC status will result in increased disclosure and governance requirements and associated costs, including higher legal, accounting, and investor relations fees[164] Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate fluctuations, deemed immaterial due to short-term money market funds and marketable securities, with no significant foreign currency risk - The company's primary market risk relates to interest rate risks, but this exposure is not material due to the nature and amount of its money market funds and short-term marketable securities[134][135] - The company is not currently exposed to significant market risk related to changes in foreign currency exchange rates[136] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2021, with no material changes in internal control over financial reporting - The company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2021[138] - There have been no material changes in the company's internal control over financial reporting during the most recent fiscal quarter[139] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any litigation or legal proceedings expected to have a material adverse effect - The company is not currently involved in any litigation or legal proceedings that are likely to have any material adverse effect[142] Item 1A. Risk Factors This section updates risk factors related to regulatory processes, healthcare legislative measures, and compliance, highlighting potential impacts from government disruptions and cost containment - Changes in funding or disruptions at government agencies like the FDA and SEC could hinder their ability to review and approve new products, potentially delaying development or commercialization[145][147] - Healthcare legislative measures, such as the Affordable Care Act (ACA) and other cost-containment initiatives, could prevent or delay marketing approval, restrict post-approval activities, and affect the company's ability to profitably sell products[148][150][152] - The company's business operations and relationships are subject to various healthcare regulatory laws (e.g., federal Anti-Kickback Statute, False Claims Act, HIPAA), and non-compliance could lead to significant penalties, including civil, criminal, and administrative sanctions[158][159] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the current reporting period - Not applicable[166] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported for this period - None[167] Item 4. Mine Safety Disclosures This item is not applicable for the current reporting period - Not applicable[168] Item 5. Other Information This item is not applicable for the current reporting period - Not applicable[169] Item 6. Exhibits This section lists all exhibits filed as part of this Quarterly Report on Form 10-Q, including organizational documents, equity plans, agreements, and certifications - Exhibits include the Amended and Restated Certificate of Incorporation, Restated Bylaws, and Amended and Restated Investors' Rights Agreement[170] - Key compensatory plans listed are the 2013 Equity Incentive Plan, 2020 Equity Incentive Plan, and 2020 Employee Stock Purchase Plan, along with various employment and consulting agreements[170] - Lease agreements for facilities in Cranbury, NJ, and Princeton, NJ, are included. The report also contains certifications of the Principal Executive Officer and Principal Financial Officer[171][173] Signatures Signatures The report is signed by David H. Mack, Ph.D., President, CEO, and Director, and Winston Kung, COO and CFO, dated August 13, 2021 - The report was signed by David H. Mack, Ph.D., President, Chief Executive Officer, and Director, and Winston Kung, Chief Operating Officer and Chief Financial Officer[177] - The signing date for the report was August 13, 2021[177]